The goal of the Seed Accelerator Rankings Project (SARP), now in its fifth year, is to encourage a larger conversation and research about the seed accelerator phenomenon, its effects, and its prospects for the future. The last five years have seen the emergence of hundreds of groups titling themselves ‘accelerator.’ But not all such programs meet the definition of accelerator, and even for those that do, there are often significant differences in program structure and goals. For an entrepreneur considering an accelerator program, finding data regarding the performance of programs is difficult, and there is much confusion and debate regarding how ‘performance’ should be measured for an accelerator.
The goal of our project is to provide greater transparency regarding the relative performance of programs along multiple dimensions that may be of importance to entrepreneurs. Many of the metrics in question, such as fundraising and valuations, are metrics accelerators and startups are reluctant to publicize out of concern for negative competitive effects should they become widely known to investors and competitors. As an independent, non-partisan research entity run by academics, we collect this sensitive data in confidence, distill it down, and provide information on the relative success of the programs and of the phenomenon as a whole – without revealing individual deal details. Our rankings are meant to provide guidance for entrepreneurs who are considering going through an accelerator, and who are wondering how they differ on performance across various categories.
Yael Hochberg Managing Director
Yael Hochberg – Managing Director. (@yaelhochberg)
Yael is a former entrepreneur and is currently an entrepreneurship and finance professor at Rice University’s Jones Graduate School of Business. She heads the entrepreneurship initiative at Rice and also serves as Academic Director of the Rice Alliance for Technology and Entrepreneurship. She was formerly on the faculty of MIT Sloan School of Management, Northwestern University’s Kellogg School of Management, and Cornell University’s Johnson School of Management. She is also an affiliate of the MIT Innovation Initiative. Yael holds a PhD from Stanford University’s Graduate School of Business, an MA from Stanford University, and an engineering degree from the Technion.
Susan Cohen Co-Director
Susan Cohen - Co-Director. (@susleec)
Susan is a management professor at the University of Richmond and a lecturer at the University of North Carolina at Chapel Hill, and was formerly the founder of a successful marketing company. She was one of the early employees at Priceline. Susan holds an MBA from Northwestern University’s Kellogg School of Management and a PhD from the University of North Carolina at Chapel Hill.
Dan Fehder Co-Director and Chief Technologist
Dan Fehder - Co-Director and Chief Technologist. (@dfehder)
Dan is an Assistant Professor of Management and Organizations at University of Southern California. He holds a PhD from MIT Sloan and is also a graduate of Harvard University and the University of Pennsylvania.
The 2017 Seed Accelerator Rankings were announced on June 5, 2017. The top ranked accelerator programs for 2017 are:
Disclosure: The ranking score for Y Combinator was produced using a combination of data provided in past years by YC and publicly available and commercial data sources.
Confidential data on startup outcomes was provided directly by the accelerator programs. In addition to hard data on the accomplishments of accelerator startups, we also surveyed the founders of the startups who graduated from the accelerator programs themselves. Response rates for our founder survey exceed 90%.
Though accelerators aim to position participating startups for long-term success, many of the accelerators evaluated in this ranking are only in their initial years of existence. To determine leading indicators of success, we conducted extensive field work, interviewing venture capitalists, angel investors and accelerator program directors. We then collected data on a full complement of metrics, and evaluated accelerators on those factors that surfaced as leading indicators of entrepreneurial success. All data is measured as of 12/31/2016.
Valuation is determined when a firm has a priced round. We considered mean and median valuation both across all portfolio startups (counting those that had not had priced rounds as zeroes), and conditional upon having obtained priced financing. Since accelerator programs vary in age, and therefore some programs’ graduates may be in more advanced stages of development, with correspondingly higher valuations, we also consider mean and median valuation one year out from program completion, two years out from program completion, and three years out from program completion, first unconditionally, across the whole portfolio, with companies that have not had a priced raise as zeroes, and then conditional on having actually raised a priced round.
Qualified Exit occurs when a portfolio company either issues an IPO or is acquired for an amount greater than $5M above the amount of capital raised by the company. A qualified exit indicates that the company has matured to the point where the entrepreneur and other investors can cash out if they wish. The $5M threshold was chosen to represent a sum of money that would materially affect an entrepreneur’s life. The ranking utilizes the percentage of program alumni companies that had a qualified exit. Overall, only 2.1% of firms in our sample have had a qualifying exit.
Qualified Fundraising occurs when a portfolio company raises an aggregate of at least $200k. We believe that a company raising a significant amount of money in the year following the accelerator program is an early indicator of its potential long term success. The $200K threshold represents a sum of money that exceeds the guaranteed investment capital typically made available to any particular accelerator’s graduates through convertible notes. The ranking utilizes the percentage of program alumni companies that have had a qualified raise within 12 months of graduation, the percentage that have had such an event to date, and the mean and median amounts raised by these two points in time, both across the entire portfolio (unconditionally, accounting for companies that did not raise as zeroes, and conditional on fundraising).
Survival, i.e. the percentage of startups still in business, is considered a controversial measure of success. While certainly firms need to survive to reach future milestones, failing, or more specifically failing fast, is a rational outcome for many startups. Thus, we considered survival at both 12, 24 and 36 months out from program end, but weighted it lower than other metrics.
Founder Satisfaction was determined by a survey of the entrepreneurs who have graduated from the programs. This survey was pushed to all graduates of participating programs. We asked the entrepreneurs if they would repeat the program knowing what they know now about the experience, and whether they would recommend the program to a friend. The recommendation question was asked on a scale of 0-10, and was used to compute a Net Promoter Score (NPS) for each program. NPS is a standard metric for assessing people’s opinions about a service or product. It is calculated by asking one question: “On scale of 0-10, how likely would you be to recommend this product or service to another entrepreneur?” Those who answer 9 or 10 are promoters, 7s and 8s are called passives, and 6 and below are detractors. The percentage of detractors is then subtracted from the percentage of promoters to determine each accelerator’s NPS. Scores closer to 100% are better.
Alumni Network is the number of companies that have graduated from the program; a strong alumni network serves as a significant asset and offers an important base of contacts and resources for future business development. Strong accelerator alumni networks have contributed to the progress and success of many startups. While older, more established accelerators who have graduated more cohorts will automatically score higher on this measure, it is also true that the strength of their networks is greater in practice by virtue of having large numbers of alumni.
Metrics were weighted within categories, and categories were then weighted to produce an overall score. Categories receiving relatively higher weightings include valuations, fundraising, exits and startup satisfaction. Adjustments are made to account for the stage companies are in when they enter the accelerator program, as well as for accuracy of measurement.
Disclaimer: Primary research for this study was conducted by Yael Hochberg, Susan Cohen and Dan Fehder. The resulting rankings reflect the opinions of the authors, and do not reflect the opinions of MIT, Rice University, or the University of Richmond. Information on the ranking criteria inputs was not available directly from the accelerator programs for a number of programs. As a result, they were not included in the rankings. Others did not meet our criteria for inclusion. Their omission from the lists in this study should not suggest anything regarding their relative quality, as it was not assessed.